Raising the ambition: Five capabilities for the independent director
Boards may have to make decisions before the data catches up
Independent non-executive directors (INEDs) are tasked with driving a company's progress by raising its ambitions for the future. They must contribute meaningfully to three key challenges: protecting what works, adapting to changing times, and continuously improving board composition and capabilities. While many boards acknowledge their weaknesses, confronting them often proves difficult.
A recent survey found that a majority of directors believe at least one fellow board member should be replaced. Companies generally recognize that their independent directors could enhance their contributions. Stewardship is one crucial capability INEDs must possess, involving making decisions today whose benefits may not be immediately apparent but could strengthen the business in the long term.
An example of this is challenging a market-anticipated share buyback to deploy capital towards extending the company's technological lead.
Another capability is foresight, which requires INEDs to identify potential risks and opportunities before they become fully visible. By asking challenging questions, INEDs can help uncover vulnerabilities that conventional analysis might miss. For example, a routine AI vendor contract could prompt a broader discussion about how the company's decision-making might be affected if the model produces unexpected errors.
INEDs must also be prepared to engage in non-linear thinking and challenge conventional assumptions. This involves disagreeing clearly and constructively, even when it may be uncomfortable or may affect their own chances of being reappointed. Boardroom courage is not recklessness; it is the willingness to raise difficult issues when the interests of the company warrant it.
Oversight should not merely mean compliance-watching. INEDs can add value by leveraging their expertise, relationships, stakeholder engagement, or connections to help management pursue new opportunities. For instance, if a company's sales pipeline stalls, an INED might use a relevant personal network to facilitate a potential business development opportunity.
Lastly, influence is a critical skill for INEDs. Building credibility and trust over time enables directors to voice concerns effectively. By asking pointed questions, understanding the details, and picking up nuances, an INED can cultivate influence that makes their input valuable during board discussions. The five capabilities are interconnected but not interchangeable, and their presence is developed through time and experience rather than being easily measurable or captured on a board skills matrix.
The ultimate mandate of an INED is to ensure the organization's long-term resilience and strength rather than merely protecting existing successes.
Written by urgent.news from The Business Times - Singapore's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
